Bill to improve tracking of special districts clears House panel

FRANKFORT—Kentucky’s special taxing districts would be required to submit data about who they are and how the money they raise is spent under legislation approved Wednesday by the House Local Government Committee.

House Speaker Greg Stumbo, D-Prestonsburg, the sponsor of House Bill 1, told the panel that his legislation is designed to bring transparency to how taxpayers’ money is being spent while ensuring continuity of services to Kentuckians. He has worked on the legislation and presented the bill with State Auditor Adam Edelen, who has reported that Kentucky has over 1,200 special districts that spend $2.7 billion of public money per year.

“If you look at the magnitude of these special districts… it is remarkable that we’ve had so few problems with them. That’s a testament to the fine Kentuckians who serve all across the Commonwealth on the library boards, the water boards, and all the special district boards,” Stumbo said.

“This is not something that is a reaction to bad conduct,” Stumbo said, adding that a special district may not be completely aware of what is expected of them by the state. “This is an attempt to clarify (by law) to make sure that they have a clear path as to what reporting requirements they need to make…and just a way to simplify this very complicated and convoluted series of laws that have developed in our statutes dealing with special districts over the past number of years.”

Public libraries, EMS boards, water districts and fire districts are all examples of special districts, which are found in 117 counties statewide. Edelen said taxpayers in those counties pay more to special districts than they do in local property tax. He also said special districts in Kentucky hold twice the amount of cash reserves as the state’s 174 public school districts, or approximately $1.4 billion.

HB 1 would define special districts and similar entities as “special purpose government entities” for reporting and auditing purposes. The entities would be required to report who they are, what they do, and their finances to the state Department for Local Government, which would put that data online in a centralized registry for public viewing. Entities that do not submit the required data would be subject to an audit at their own expense, Edelen said.

The legislation would also establish education and ethics rules to ensure that the newly-defined special purpose government entities are putting taxpayer money to good use, and make it easier for defunct or inactive entities or entities that “choose to go outside the process,” as Edelen said, to be dissolved by law.

Special districts and similar entities would have to register with the Department for Local Government by the end of this year under HB 1, Edelen said. The centralized registry would go online in the fall of 2014.

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